Tuesday, January 18, 2005
Copyright © Las Vegas Review-Journal

Sunterra will acquire time-share loans for $8 million

Sunterra Corp., a North Las Vegas-based time-share company, plans to announce today that it is buying several thousand loans at its North American resorts for $8 million.

The company is buying 5,500 loans for time-share units at 19 Sunterra resorts. They include 3,300 loans less than 60 days past due and 2,200 loans more than 60 days past due.

Sunterra intends to foreclose on mortgage loans that are in default and then remarket those units.

Sunterra is buying the mortgages, valued at $23 million, from TerraSun.

TerraSun is a special-purpose company Sunterra created to hold the mortgages and issue bonds to pay for the mortgages in 1999. The mortgage loans held by TerraSun were off Sunterra's balance sheet.

Sunterra is also announcing today that it intends to call the vacation ownership bonds and to transfer the mortgage assets to Sunterra. The transaction will increase the amount of assets on Sunterra's balance sheet in relation to liabilities.

"It's a great deal. We're getting a lot of assets for less than fair value," Sunterra spokesman Bryan Coy said.

The company expects to pay less than the value of the assets, mainly because the bonds were overcollateralized, he said.

Separately, within two months, the company expects to use its early redemption option for its Dutch Elm vacation ownership receivables, its last off-balance-sheet mortgage loan portfolio. That transaction's size wasn't disclosed.

Sunterra has 300,000 time-share owners and 93 affiliated resorts in the United States, Hawaii, Canada, Europe, the Caribbean and Mexico.